Category Archives: Arbitration

Before I went to law school, I thought arbitration sounded neat. I had heard that lawsuits took years to resolve in court and were ridiculously expensive. Arbitration, on the other hand, sounded like an effective alternative to court. What is arbitration? As opposed to going to court, the feuding parties choose a “neutral” third party to review the facts, hear-out both sides, and make a ruling. Many proponents of arbitration say that it is faster, cheaper, and more fair. It’s not. Arbitration is bad for employees. Why? No jury. No media. No appeal. Period. Just an old white guy (usually) who rules with an iron fist. For those of you who like bullet points, here is a quick list of reasons why arbitration hurts employees:

Arbitration is Bad for These Seven Reasons

Unlike courts, arbitration is not a public system. Why is this bad? Because a company may repeatedly break the law, get sued in arbitration, but the public never finds out and there is no pressure on the company to ever make a change.

Unlike a judge in court, the arbitrator is not neutral. First, major corporations are constantly in arbitration against employees, and the corporation generally handpick arbitrators from firms with proven records of favoring the corporation. If word gets around that arbitrator ruled for an employee, the arbitrator gets blackballed by defense lawyers and goes out of business. It has happened. Second, and worse, many of these “neutral” arbitrators are under contract with corporations that engage in multiple cases. This is an enormous conflict of interest. Third, the company pays the majority of the arbitrators fee, essentially guilting the arbitrator to rule for the company.

Arbitrators do not have to reveal the reasons for his or her decision. They can say, “Company wins” and go home and take a nap. They are not legally accountable for errors, and their decisions do not set legal precedent for future cases.

Even if an arbitrator’s decision is legally incorrect, it still is enforceable, and there is nothing you can do about it. There is virtually no right to appeal an arbitrator’s ruling.

Generally, the company chooses the city or town where the case is heard, allowing it to make the case inconvenient, expensive, and unfair for employee bringing the complaint.

Arbitrators are not required to know the law relevant to the cases they adjudicate, follow legal precedents, or even be lawyers. Although most arbitrators are lawyers, it isn’t even a requirement!

Normal procedural rules for gathering and sharing evidence and safeguarding fairness to both parties do not apply in arbitration cases.

How to Avoiding Arbitration in Employment Disputes

Don’t sign the arbitration agreement! This is the easiest way to avoid this mess. Arbitration is a contract, and contracts are not enforceable unless two parties agree. You don’t have to agree to it. If your employer asks you to sign an employment agreement, cross out the arbitration provision, initial and date it, and then give it to the employer. There is a risk that they won’t hire you, but if you’re a valuable hire I bet that many employers would simply ignore your failure to agree and hire you anyway. Make sure you get a copy of the revised agreement when you first get hired.

Regardless of an existing signed arbitration agreement, have your lawyer file your case in court anyway. In many cases, the arbitration agreement is unenforceable due to various legal doctrines.

There is much more I could write on this subject. But I wanted to keep this article brief and to the point. Arbitration is bad and you should avoid it at all costs!

This blog is for employees.

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Its main goal is to explain key employment laws that every employee in California should know. The information presented here is derived from real court decisions and statutes, and is intended to help everyday folks understand the complex world of employment law. Please note, however, that nothing presented here is intended as legal advice. See the disclaimer above.